Tag Archives: mortgage

I had to write the first big cheque last week (well, the first one since the one I wrote for buying the place, which was a whopper!), so I thought it was probably time to put my cards on the table and share my budget.

There are really two parts to the budget: what’s needed to get it to the point where it could be sold or rented and what’s needed to furnish it to turn it into a holiday let. Here are our figures.

Item

Estimate

Roof & stonework

£16,000.00

Electrics

£4,655.00

Heating & burner install

£7,000.00

Joinery

£5,000.00

Kitchen units

£3,000.00

Downstairs flooring

£1,600.00

Carpets

£750.00

Plasterboard & insulation

£2,000.00

Skirting boards

£200.00

Kitchen appliances

£2,000.00

Switches, sockets, light fittings

£500.00

Interior paint

£500.00

Exterior paint

£1,000.00

Shower tray & screen

£700.00

Shower

£400.00

Woodburner & kit

£1,500.00

Windows and door

£5,000.00

Door stripping

£400.00

Miscellaneous tools

£2,500.00

Bathroom tiles

£250.00

Garden/fencing

£2,000.00

Interest, council tax, electricity

£3,500.00

Total: £60,455 *gulp* And we’re actually already £2,720 over the roof budget because of the extra work to the stone. On the plus side, the house and surrounding fields were valued at £77,500 on the home report (the rest of the value being assigned to the other croft) and should be worth in the region of £150-160,000 once we’re done, so we’re still just about in profit.

On the furnishings side..

Beds x 4

£750.00

Mattresses x 4

£1,300.00

Sofas x 2

£1,100.00

Kitchen table & chairs

£800.00

Coffee table

£200.00

TV unit

£200.00

TV

£300.00

Wardrobes x 3

£750.00

Drawers x 2

£500.00

Bedside tables x 4

£500.00

Pots, pans & crockery etc

£600.00

Cushions, pictures etc.

£500.00

Total: £7,500. I’ve priced up for mostly new, but am hoping I can save some money by buying good-quality second hand – browsing the local Facebook for sale group, I’ve already seen a really nice oak single bed frame that would be perfect for the small bedroom for £45. A friend of mine recently furnished an entire rental property from the weekly furniture auctions at Dingwall and has a teenage niece who’s got the long summer holidays coming up who is very, very talented at smartening up bargain buys, so I’m hoping she might be employable for a few days! The one thing I refuse to buy second-hand are mattresses.

We’ve also agreed a £5,000 contingency, bringing the overall grand total potential spend to an absolutely eye-watering £72,955. We have enough cash, from savings and 0% offers, to get us to the house being more or less finished, but not the garden – so I need to crack on with the decrofting application for the house site to make sure that as soon as there’s a working kitchen and bathroom in place, I can get on with a mortgage application to release money to pay back the 0% deals as they expire and put the final touches to it so it can start earning its keep.

Yes, we’ve reached the planning stage. This is a list (not quite in the right order) of all the stuff we think we have to do to Ethel’s House.

Treat woodworm.

Strip all rooms back to walls.

Repair kitchen ceiling.

Re-wire house.

Enlarge fireplace in living room to take woodburner.

Replace windows.

Replace front door.

Replace roof and all rainwater goods.

Repair chimney.

Enlarge two existing roof lights and add two more.

Insulate all rooms and roof.

Install underfloor heating in kitchen and bathroom.

Install new kitchen.

Install new shower.

Lay solid wood flooring throughout ground floor.

Carpet up the stairs and throughout upstairs landing and bedrooms.

Install woodburner in living room.

Decorate throughout.

Furnish.

Just a bit of work to do, then… We are really dependent on the electrician and the roofer, as a lot of the rest can’t be done until they’ve finished. By the time we’ve got it furnished, hopefully the decrofting of the house site will have come through and I’ll be able to get it revalued and apply for a small mortgage to pay off all the money I’ll be borrowing to pay for the list above. At the moment I have a home report that says it’s worth £77,500. Compared to other 3-bed near-identical houses in the village currently for sale, that’s very, very low – although all those came to market after the home report was done. Given there’s a 2-bed bungalow with no land 200 yards up the road that’s been valued at £125,000, I think we should do okay when it comes to getting a good low loan-to-value.

ABBA had it right; it ain’t funny, especially when you’re trying to raise it against an unmortgageable property.

I will hold my hands up here and say that I’ve been EXCEPTIONALLY lucky and am borrowing the money to buy the croft from family, although I’ll be paying interest on it at base rate plus 3%. That covers the purchase price and my savings will cover the solicitors’ fees and some of the work that needs doing, but by no means all of it.

So what am I doing about the rest? Well, it’s a bit of a risk and could all go horribly wrong, but I have a clean credit record and four credit cards with high limits that keep sending me 0% cash and balance transfer offers. So I’m planning to put the work on the cards and hope that I can get it done up and the issue that prevents the house being mortgageable sorted before the 0% period runs out, then apply for a mortgage to pay back the cards and the bulk of the family loan (although the family is happy to let the loan run for a while if mortgage rates start doing silly things).

As it happens, I had a bit of luck last week regarding finances. I’m self-employed and one of the companies I freelance for offered me a guaranteed 20 hours a week. Initially I was going to turn it down, as it’s less money than I usually charge per hour and they wanted me to work 6am until 10am every weekday. Then I thought about it, decided that I was being a totally spoilt princess and if the universe was going to drop over half of what I need to earn each month into my lap in return for the alarm clock going off half an hour earlier than it does anyway for my husband to get up, it would be extremely ungracious of me to turn it down. Guaranteed income means less time spent drumming up new business and these guys pay promptly and never need chasing. The rest of what I need to earn each month will be easily covered by my other regular clients and shouldn’t take up more than 8-10 hours a week, meaning I’ll be able to block out periods of time to work on the house. I start tomorrow, wish me luck!

Technically, when I say I’ve had an offer verbally accepted on a house, that’s not strictly true. I am, in fact, buying two croft tenancies, one of which happens to have a house on it. Many crofting tenants have bought out their tenancies and become owner-occupier crofters, these two still remain as tenancies and the house site has not been decrofted, so the Scottish Ministers own the land and, assuming that I’m considered a suitable person to be assigned the tenancies, I will have to pay them rent for the crofts until I can buy them out. The buy-out figure is usually 15 times the annual tenancy (which will not be huge – to give you an idea, the 3.12 acres that go with the house we currently live in was bought out by the previous owner for under £100) but once you’ve become an owner-occupier, if you sell the land on within ten years (recently increased from five years), you have to pay half the difference between the amount you paid and the current value back to the landlord.

It’s all a bit of a legal minefield and having a solicitor who understands crofting law is absolutely essential. The formal offer that went in for these two tenancies ran to 23 clauses on top of the Scottish Standard Clauses and includes things that wouldn’t have crossed my mind, such as ensuring the crofts are sold “together with the whole permanent improvements, including the dwellinghouse” (it would be a shame to pay all that money and find they’ve bulldozed the place…), that “it is an essential condition of this offer that the Crofting Commission consents to the assignation of the tenancies” (it would also be a shame to pay all that money and not be able to do anything with the place) and various other clauses that ensure I don’t get stuck with any very large bills or long-lost claimants to the tenancies popping out of the woodwork.

The other big stumbling block is because the purchaser of the tenancies doesn’t own the ground the house sits on, it’s completely unmortgageable. Even the bridging loan companies I rang wouldn’t touch it (not enough equity in our current house to back it up). One absolute right a crofting tenant has, however, is to buy the house site from the landlord and have it decrofted – usually an area of 0.2-0.5 acres is permitted to be taken out of crofting tenure to give some garden space as well. This then makes the house suitable for mortgage lending purposes. I’ll talk about finances in another post – I will be completely transparent about money on this blog – but I’m in the very fortunate position of being able to borrow money from family to make the initial purchase, on which we’ve agreed I’ll pay interest of Bank of England base rate plus 3%.

One of the conditions of the Crofting Commission thinking me a suitable person to be assigned the tenancies is that I work the crofts. So I’m not only taking on a renovation project, I’m taking on just under 10 acres of fields, which means I’m going to be learning to keep sheep and make hay as well. Never a dull moment!

Categories

Affiliate links

The House Hoarder website uses affiliate links - all of them are tagged with an asterisk* after the link. Affiliate links means that sometimes if you click through to a website and register or purchase something, I get a commission from that sale at no extra cost to you. All opinions and reviews are my own.

Meta

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.